Lindt offers sweet results in a sour market

Luxury chocolatier Lindt & Sprüngli has released results that show its high-end confectionary is benefiting from increasing demand, despite a slowing chocolate market. While other chocolate retailers saw muted sales, Lindt reported a 6.8% rise in consolidated sales through 2016, to $3.85 billion. This is down from the 7.9% rise in sales logged the previous year, but significantly better than the wider market. Organic sales growth in the same period was 6%, and the group’s operating profit rose by 8.4% to $556 million.

Lindt’s share price jumped by almost 1% on Tuesday

SOURCE: Yahoo Finance

According to Lindt, its balance sheet “remains very solid”, and the company is pleased with its performance against the backdrop of “a persistently challenging environment of stagnating and even declining chocolate markets, generally subdued consumer sentiment caused by political and economic uncertainty, high raw material prices and increasing price pressure from trading partners.”

In Europe, Lindt saw organic sales growth of 7.4%, while some smaller markets – including Brazil and Japan – achieved double-digit growth thanks to the roll out of Lindt shops and cafes. The laggard region for the company was North America, where organic sales rose by 3.4% in 2016.

In a statement on the results, the company said:

“With its three leading brands – Lindt, Ghirardelli and Russell Stover – Lindt & Sprüngli is clearly positioned as No.1 in America’s premium chocolate segment. Cooperation between the US subsidiaries Lindt, Ghirardelli and Russell Stover was enhanced in 2016. The establishment of a new subsidiary, Lindt & Sprüngli (North America) Inc., helps to support the three US subsidiaries in centralized tasks such as merchandising, logistics and IT, while at the same time creating synergy effects.”

DisclosureDominion holds Lindt in its Global Trends Luxury Fund.

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